Luxe Energy Enters Delaware Basin With 18,000 Net Acres

A new company has found its initial footing in the ever resilient Delaware Basin almost a full year after securing backing from private equity firm Natural Gas Partners.

Luxe Energy LLC said Jan. 21 it acquired about 18,000 net acres in the core of the Delaware Basin from two separate sellers for an undisclosed amount. The sellers include Endeavor Energy Resources LP and Finley Resources Inc.

The acquisition follows a series of deals in the southern Delaware announced earlier this week by Concho Resources Inc. (NYSE: CXO). Concho’s deal values ranged from $13,600 to $18,000 per acre, said David Tameron, senior analyst with Wells Fargo Securities.

The persistence of A&D activity in the Delaware “highlights continued interest from public and private investors alike in getting exposure” to the basin despite the current environment, said Tudor, Pickering, Holt & Co. in a report.

As part of its deal, Luxe will gain certain undeveloped acreage and producing oil and gas properties located in Reeves and Ward counties, Texas. Current net production is about 1,000 barrels of oil equivalent per day (boe/d).

In June, Finley sold 14,322 net acres in Culberson and Reeves counties with 1,300 boe/d in production for $75 million.

“This is our first step, with the support of Natural Gas Partners, to build an inventory of highly meaningful and economic well locations,” said A. Lance Langford, Luxe CEO and president, in a statement.

The contiguous acreage will enable Luxe operational efficiencies using "best-in-class technologies," Langford said. The company expects the ability of long lateral drilling locations will result in premium well economics.

“This core ‘deep basin’ acreage provides several thousand feet of over-pressured oil column with numerous prospective intervals,” he added.

The properties are majority operated with a high average working interest. Luxe will also have the opportunity to design, construct and operate midstream infrastructure.

Eyes On West Texas

In May 2015, Luxe received $500 million in equity from Natural Gas Partners. At the time the Austin, Texas-based company said it planned to initially focus on West Texas and apply technologies such as long-reach horizontal drilling and multistage fracking.

Even though Luxe has since closed on its opening purchase of 18,000 net acres in the Delaware Basin, the company has plans for more.

"While we are thrilled to have closed on these two transformational acquisitions, Luxe Energy continues to identify, evaluate and acquire additional growth opportunities," Langford said.

Luxe's founders, Langford and COO Jeff Larson, have worked together for more than 24 years, according to a press release. The pair started at Burlington Resources Inc. and most recently held positions at Statoil ASA (NYSE: STO).

Prior to Statoil, Langford and Larson were responsible for Brigham Exploration Co.'s entry into the Bakken Shale, the release said. In 2011, Brigham was acquired by Statoil for about $4.4 billion.

Contact the author, Emily Moser, at emoser@hartenergy.com.